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The Effects of the Labor Shortage on Workers

Since the onset of the pandemic and “The Great Resignation,” labor shortages have become an increasing concern for businesses across all industries. In 2022, a record-high 50 million U.S. workers left their jobs, according to federal data. While employee resignations began to slow in the second part of 2023, businesses in all industries are still struggling to fill open positions.

Employee frustration

On average, people spend 81,396 hours of their lives working—the only other activity we spend more time doing is sleeping. The impact of labor shortages extends beyond employers and to their workers. A survey found that 73 percent of workers feel their employer does not understand the frustration that comes with working at an understaffed company. When discussing the survey results, Monster Worldwide, Inc. Chief Strategy Officer Scott Blumsack stated, “while a lot of the research has gone into the labor shortage’s impact on businesses and business owners, less has been done about how it impacts workers.”

When a company is understaffed for an extended time, customer service levels drop, errors increase, and employees become frustrated and resentful. Here are some statistics on the effects of the current labor shortages on workers:

  • 66 percent feel they are experiencing burnout
  • 60 percent feel emotionally detached while at work
  • 49 percent are experiencing anxiety
  • 38 percent are working extra hours without appropriate compensation
  • 34 percent are experiencing physical symptoms such as headaches and body aches
  • 19 percent consistently feel miserable

How can employers combat these negative effects?

Here are ways employers can support their employees and reduce the negative effects of the current labor shortage:

  • Offer burnout breaks: In response to the high level of employee burnout, some companies—including Bumble, Hubspot, and LinkedIn—shut down for a week to allow their employees to be fully offline, recharge, and focused on family and friends.
  • Foster employee well-being: Because they recognize that their workers are their most valuable asset, 66 percentof companies are making changes to better support their employees’ mental well-being. According to NFP’s 2022 U.S. Employer Benefits Survey, organizations typically spend between $200 and $600 per employee on well-being benefits. But over the next year, more than half of employers plan to increase budgets by 5 to 25 percent. In addition to mental health resources, employers are reassessing their family-support service offerings such as backup childcare, dependent-care stipends, or leave for family care.
  • Adjust performance metrics:The lack of reliable childcare experienced during the pandemic has left many employees—primarily working mothers—exhausted and stressed. To combat this, employers are reevaluating what productivity looks like within their company. According to Gallup, performance management must evolve to include agile goals, ongoing conversations, and dynamic adjustments to accountability and incentives.
  • Provide hybrid and/or remote work options:Employees embraced remote work during the pandemic and the flexibility and work-life balance that it provides. In fact, 48 percent of respondents to a SHRM Research Institute survey said they will “definitely” seek a remote position in their next job. Therefore, if your organization requires all employees to report to the office each day, you’re risking the loss of your top workers to your more flexible competitors.
  • Show your gratitude: Your existing employees are going above and beyond to compensate for roles that are going unfilled. Showing gratitude doesn’t always have to come in monetary form—even a small gesture can go a long way in making your team members feel appreciated. According to a study conducted by the Incentive Research Federation, 65 percent of workers in a small-reward scenario will choose a non-cash award over a fiscal reward.

Related: Using Remote Work to Retain Your Top Talent

Related from Aleron partner Acara Solutions: 7 Ways to Attract Talent Despite the Current Labor Shortage

A look to the future

It’s predicted that the labor crisis will continue to get worse because each year fewer people enter the workforce while retirees are exiting. With the cost of replacing an employee estimated to be between 110 to 213 percent of their salary and challenges in attracting and recruiting quality talent, it’s up to organizational leaders to find ways to curb the negative effects of labor shortages on their workers. Those that can accomplish this are going to win over their competitors in the war for talent.

Related: Webinar Recap: The Demographic Drought

Suzie Mitchell, Senior Vice President, Client Delivery